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December 1, 2004

Sales and Trading Job Losses Expected At Deutsche Bank

By Peter Chapman

Analysts expect layoffs in Deutsche Bank's equities sales and trading arm in the wake of a major restructuring. The large bank, as part of a broader revamp, folded its equities businesses into the group responsible for sales and trading of fixed income securities, foreign exchange and commodities. The consolidation is expected to save the bank e500 million per year.

"We see potential for cost reduction as a result of closer integration between those two areas," states J.P. Morgan Securities analyst Kian Abouhossein. "A material part of the restructuring burden will fall onto the equity sales and trading franchise."

Some 1,900 job cuts are expected to come from Deutsche's legions of technology workers. But about 200 could come from the equities front office, notes Abouhossein. The analyst estimates the newly-combined group employs about 5,500. Since 2001, Deutsche has fired 14,500 employees, leaving it with about 66,000.

Ripe for cutting among Deutsche's seven equities businesses is the cash business, according to Abouhossein. Revenue generation is e500,000 per head in cash equities, compared to e1.3 million for all of equities. Abouhossein believes staff levels are too high in cash equities.

"In our view," says the analyst, "Deutsche Bank's cash equities business looks unprofitable." Cash equities employs 700 in research; 550 in sales; and 300 in execution.